Spain | COVID-19: A crisis of supply or demand?

Summary

The fall in GDP expected as a result of COVID-19 will be unparalleled in history. The decline in GDP per working-age population in 2020 is expected to be 10% greater than the decline seen in 2019, marking a return to levels seen in 2015.

Key points

• Key points:
• The magnitude of this decline makes it more necessary than ever to evaluate the factors behind this debacle.
• Discrepancies could arise regarding the type of policies to apply during recovery.
• Spain will reach levels of public debt-to-GDP of around 120%, with unemployment rates several percentage points higher than the 13.8% seen in 2019 and greater public expenditure needs.
• Over 2020 as a whole, supply and demand factors are expected to have a similar contribution, although performing differently depending on the quarter.
• In the first half of 2020, GDP is expected to contract by more than 20% and social security affiliation is expected to contract by 4.9% compared to the final quarter of 2019.

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